Case Study

The impact of Brexit on the UK energy sector

In November 2015, National Grid asked Vivid Economics to provide an assessment of the impact of leaving the EU (“Brexit”) on the UK’s energy sector, focusing on the impact of potentially leaving the Internal Energy Market (IEM). This report found that the overall impacts of Brexit on the energy sector are likely to be negative. Any potential benefits of Brexit are likely to be limited, given that the UK is committed to decarbonisation and air quality targets equal to or greater than EU requirements.

In March 2016, Vivid Economics published a note on the impact of Brexit on the UK energy sector, building on our work for National Grid and including a deeper discussion of potential impacts beyond departure from the IEM. This broader assessment found that the increase in the cost of investment due to the uncertainty arising from Brexit negotiations could also be a significant cost, given that the UK is undertaking a historic level of investment in energy infrastructure.